Release Date: 03/ 16/ 2006
BAPCPA, enacted in April 2005, changed how and under what conditions, individuals can file for bankruptcy. It will make it more difficult to file for Chapter 7 bankruptcy, which discharges all debts. More people will be required to file for Chapter 13 bankruptcy, which requires payment of the debt under a court-ordered payment plan over three to five years. The new law only applies to cases filed six months (October 2005) after the law in enacted.
Significant Changes to the Bankruptcy Law:
- Individuals will undergo a means test of Chapter 7 bankruptcy. If your income is below your state's median income creditors can move to dismiss your Chapter 7 claim and debtors will be shifted to a five-year Chapter 13 plan.
- All debtors must receive credit counseling from an “approved nonprofit budget and credit counseling agency” within 180 days prior to filing.
- Chapter 13 debtors must complete a personal financial management course approved by the U.S. trustee before they can be discharged by the court.
- Debtors may not obtain Chapter 13 discharge if they also obtained a discharge under Chapter 7, 11, or 12 within the past 4 years. However, debtors may still file under Chapter to gain benefits of the stay.
- Stays for repeat filers terminate after 30 days if they have filed for Chapter 7, 11, or 13 within one year of the present case. Parties may move to extend the stay but must show the court that the filing is in good faith.
- Debtor may not obtain a Chapter 7 discharge if he received a prior discharge within the last 8 years.
- Debtors may elect for higher state law homestead exemption if they have lived in that state for 730 days prior to their filing. Maximum amount of interest allowed for exemption is $125,000 for the 1,215 day period before filing.
- Domestic Support Obligations can not be stayed. Failure to remain current on support claims is grounds for conversion or dismissal of a case. Debtors may not obtain a discharge unless domestic support obligations are paid in accordance with the terms of the plan.
For a complete copy of this law or any other information please refer to the American Bankruptcy Institute at (703) 739-0800 or visit their Web site at http://abiworld.net/bankbill/.
